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GM IPO Should Be Delayed to Maximize U.S. Return, Nader Says

November 12, 2010
2 min to read


President Barack Obama should suspend General Motors Co.’s initial public offering to ensure the best return for U.S. taxpayers, Ralph Nader and three other consumer advocates said in a letter, Bloomberg reported.


GM is seeking to raise as much as $10.6 billion in the sale of shares, according to a Nov. 3 regulatory filing. The IPO, which may occur as early as Nov. 17, would reduce the Treasury Department’s investment in the Detroit-based company to 43 percent from 61 percent, according to the filing.

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“The government obviously has a serious fiduciary duty to taxpayers to obtain the best possible return on our investment in GM,” Nader wrote today in the letter to the Obama administration. The letter was also signed by Joan Claybrook, president emeritus of Public Citizen; Clarence Ditlow, executive director of the Center for Auto Safety; and Public Citizen President Robert Weissman.


The government may lose $4.9 billion in the share sale, they said, citing press reports. The Treasury will seek to recoup taxpayer losses in future offerings at higher prices.


Investor prudence “counsels for maintaining the government’s current share and delaying a sell off so that the government can capture likely improved returns in the future,” they said.


They also pointed to the need to protect jobs and prop up the U.S. economy by influencing GM investment decisions. They cited reports that foreign manufacturers and sovereign wealth funds are considering purchases of GM shares.


The U.S. stake in GM could be used to promote policy changes to deal with climate change, through backing dramatically increased investments in electric cars “and other transformational technologies,” they said.

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